Farmland market levels off, but outlook remains positive

Farmland values may have reached their near-term peak, say agents, in a market with strong demand yet many uncertainties.

These include the prospect of a general election in the next year or so, often a signal for those considering selling to sit tight.

However, further falls in Basic Payment Scheme support in England and the slow development and demands of policy changes in other UK nations may trigger a few marketing decisions, they say.

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Values in England appear to have plateaued after several quarters of impressive growth, says Strutt & Parker, which puts the average price of arable land sold so far during 2023 at £10,900/acre, the same as at the end of June.

The firm’s farmland database records the sale of all farms, estates and blocks of publicly marketed land in England of more than 100 acres.

“Despite rising interest rates and a squeeze on farm profitability the farmland market remains extremely resilient,” says head of estates and farm agency Matthew Sudlow.

“More than 60% of the arable land traded in England this year has sold for more than £10,000/acre, compared to 33% in 2021.

“Our figures point to the average value of pasture dropping from £8,700/acre in 2022 to £8,000/acre today.

“However, this figure should be treated with some caution… the average value can be heavily skewed by the sample of farms sold during each period.”

Overseas interest

As well as the usual rollover farmer buyers, private individuals, the investment sector and green interests, the firm is seeing some significant purchases from a handful of overseas buyers, who like the scale offered by the UK market.

“The UK’s appeal is being enhanced by our farming industry’s enthusiasm for adopting regenerative farming techniques,” says Matthew.

“While it does feel as if the bull run in the farmland market might be over for now, our forecast is that we are in a period of stabilisation, rather than facing any significant decline in values.”

Savills’ Farmland Value Survey is a quarterly appraisal of nine types of vacant possession bare land in blocks of 100-200 acres in 25 regions across Great Britain.

This puts supply to the end of August at 124,327 acres, which is 7% above the 10-year average and 25% above the 2022 level.

Rising land values

In the 12 months to the end of September, all GB land types have risen by an average of 7.7% to £8,196/acre, says Savills.

This is based on a 0.4% rise in English land values in July-September, a lift of 8.3% in Wales, and no change in Scottish values.

The firm puts the following values on Grade 3 land by country:

• England Arable £9,078/acre, livestock £7,538/acre
• Scotland Arable £6,898/acre, livestock £4,466/acre
• Wales Arable £8,183/acre, livestock £7,515/acre.

Evelyn Channing, Savills’ head of rural agency in Scotland, says that good, commercial well-equipped farms are attracting interest and holding firm on price.

“More potential farmer buyers are taking stock and waiting to see how policy evolves.”

Knight Frank says the price of bare agricultural land in England and Wales rose by 1% to hit another record high in the third quarter of 2023, according to the firm’s index, which puts an acre of land at £8,951, an 8% rise on the year.

Demand remains strong, and in localised cases this has driven prices above £15,000/acre.

Environmental buyers are still in the market, but are reportedly becoming slightly less active due to a lack of clarity around the development of nature-based finance frameworks in the UK, says the firm’s head of rural research, Andrew Shirley.

Sweet spot in west Dorset

© Symonds & Sampson

Honeycombe Farm at Broadwindsor, west Dorset, will soon come to the market as its owners are moving to a larger holding.

This farm has just over 87 acres of gently sloping productive pastureland which selling agent Symonds & Sampson describes as being in excellent heart.

Currently home to a herd of Hereford sucklers and sheep, there is also a strong residential element.

The three-bedroom stone farmhouse has planning to extend and there is a three-bedroom bungalow with an agricultural occupancy condition.

Honeycombe Farm has a good range of livestock buildings and concrete yards, as well as rental income from two barn conversions and planning permission for a third.

It is for sale as a whole or in four lots, with an overall guide price of £2.72m.